Finance Act, 1994

Amendment of section 34 (exemption from tax of income derived from patent royalties) of Finance Act, 1973.

28.—As respects payments made on or after the 11th day of April, 1994, section 34 of the Finance Act, 1973 , is hereby amended in subsection (1) by the substitution for the definition of “income from a qualifying patent” of the following definition:

“‘income from a qualifying patent’ means any royalty or other sum paid in respect of the user of the invention to which the qualifying patent relates, including any sum paid for the grant of a licence to exercise rights under such patent, where that royalty or other sum is paid—

(a) for the purposes of activities which—

(i) would be regarded, otherwise than by virtue of section 39B of the Finance Act, 1980 , or paragraph (b) or (c) of subsection (5) of section 39A of that Act, as the manufacture of goods for the purpose of relief under Chapter VI of the said Act, or

(ii) would be so regarded if they were carried on in the State by a company,

or

(b) by a person who—

(i) is not connected (within the meaning of section 33 of the Capital Gains Tax Act, 1975 ) with the person who is the beneficial recipient of the royalty or other sum, and

(ii) has not entered into any arrangement, in connection with the royalty or other sum, the main purpose, or one of the main purposes, of which was to satisfy the provisions of subparagraph (i);”.